The "tongue-lashing" senior officials of the Central Bank including the Governor received from president Gotabaya Rajapaksa a few days ago was an act of bullying, former finance minister Mangala Samaraweera said. In an open letter to Prime Minister and Finance Minister Mahinda Rajapaksa, Samaraweera noted that never in the seven- decade long history of our Republic have either the government or opposition ever spoken to the Central Bank in such a manner.
"Under the full glare of cameras, the President’s outburst publicly humiliated the institution and its officers in a most disgraceful manner. To publicly castigate public officials in such a crabby and aggressive manner is nothing less than an act of bullying. It reflects an inner callousness and meanness of spirit that sets an unfortunate example to our nation’s children," Samaraweera said.
As Mahinda Rajapaksa's predecessor who was in charge of the subject of finance until November last year, Samaraweera said that it was his duty to defend the Central Bank against the petulant charges that have been unfairly and ungraciously been hurled at them, especially due to the incumbent's deafening silence.
"Sri Lanka’s current economic woes are fundamentally fiscal, not monetary. Therefore, there is only a limited role for monetary policy in this crisis. Even so the Central Bank has undertaken a number of major stimulus activities. Some of them are well beyond the call of duty – so much so that members of the Monetary Board and Public Debt Department have left themselves open to facing a court of law," he added.
Samaraweera observed that the Rajapaksa government took the unprecedented and irascible step of asking two of five members of the Monetary Board to resign even though their six-year terms were not completed.
"As a result, the three members of the Monetary Board are all appointed by the President. In fact, the majority (the Governor and Treasury Secretary) effectively serve at the President’s and Finance Minister’s pleasure. However, it is now an open secret that the Central Bank’s politicization is initiated not by you, but by the true economic czar of the regime. A person once called an ‘economic assassin’ by a senior government minister," he warned.
A Central Bank’s role is to manage the supply and cost of money in order to achieve price stability, Samaraweera said adding that the cost of money has come down dramatically, the supply of money has increased to a more than satisfactory level, and inflation remains under control.
"In other words – the Central Bank has done its job. To shout and scream at the CBSL in this context simply reflects no understanding of the Central Bank’s role in the economy. The responsibility of driving economic growth and articulating the strategy for economic revival is the role of the Treasury and other arms of the government. The President’s accusations have no basis. In fact, they suggest that he is unable to cope with the demands and strain of his great office. This comes as no great surprise considering that he has very little economic, political and policy-making experience," Samaraweera said.
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